Blackpool & Flyde Aero Club
v Blackpool Borough Council

Court of Appeal [1990] 3 All ER 25; [1990] EWCA Civ 13

Overview

The case considered invitations to tender - was there an implied promise to consider all tenders submitted by the due date?

Facts

Blackpool Borough Council (the Council), which ran Blackpool Airport, invited tenders for certain flights, to be submitted in an envelope provided by the Council by a stipulated date. The Aero Club submitted by the due date, but an error by the Council recorded it as received late and the tender was not considered. The Aero Club alleged breach of contract, they claimed the Council had promised to consider all tenders submitted by the due date.

Held (trail judge)

An express request for tender can give rise to an implied obligation to consider the tender. In this case the stipulation by Council that late tenders would not be considered gave rise to a contractual obligation to consider timely tenders.

Held (appeal)

Bingham LJ

Because of the 'considerable labour and expense' that may be involved in preparing a tender then, at least where invitations to tender are provided to selected parties with clear procedures (as in this case) then, if the invitee submits a conforming tender 'he is entitled … to be sure that his tender will … be opened and considered'. To this extent, the invitation to tender constituted an offer which was accepted when the Aero Club made a timely submission.

A tendering procedure of this kind is, in many respects, heavily weighted in favour of the invitor. He can invite tenders from as many or as few parties as he chooses. He need not tell any of them who else, or how many others, he has invited. The invitee may often, although not here, be put to considerable labour and expense in preparing a tender, ordinarily without recompense if he is unsuccessful. The invitation to tender may itself, in a complex case, although again not here, involve time and expense to prepare, but the invitor does not commit himself to proceed with the project, whatever it is; he need not accept the highest tender; he need not accept any tender; he need not give reasons to justify his acceptance or rejection of any tender received. The risk to which the tenderer is exposed does not end with the risk that his tender may not be the highest (or, as the case may be, lowest). But where, as here, tenders are solicited from selected parties all of them known to the invitor, and where a local authority's invitation prescribes a clear, orderly and familiar procedure (draft contract conditions available for inspection and plainly not open to negotiation, a prescribed common form of tender, the supply of envelopes designed to preserve the absolute anonymity of tenderers and clearly to identify the tender in question, and an absolute deadline) the invitee is in my judgment protected at least to this extent: if he submits a conforming tender before the deadline he is entitled, not as a matter of mere expectation but of contractual right, to be sure that his tender will after the deadline be opened and considered in conjunction with all other conforming tenders or at least that his tender will be considered if others are. Had the Club, before tendering, enquired of the Council whether it could rely on any timely and conforming tender being considered along with others, I feel quite sure that the answer would have been "of course". The law would, I think, be defective if it did not give effect to that.

It is of course true that the invitation to tender does not explicitly state that the Council will consider timely and conforming tenders. That is why one is concerned with implication. But the Council does not either say that it does not bind itself to do anything, and in the context a reasonable invitee would understand the invitation to be saying, quite clearly, that if he submitted a timely and conforming tender it would be considered, at least if any other such tender were considered.

I readily accept that contracts are not to be lightly implied. Having examined what the parties said and did, the court must be able to conclude with confidence both that the parties intended to create contractual relations and that the agreement was to the effect contended for. It must also, in most cases, be able to answer the question posed by Mustill LJ in The Kapetan Markos N.L. (NO.2) [1987] 2 LI. 321 at 331: "What was the mechanism for offer and acceptance?" In all the circumstances of this case (and I say nothing about any other) I have no doubt that the parties did intend to create contractual relations to the limited extent contended for. ... I think it plain that the Council's invitation to tender was, to this limited extent, an offer, and the Club's submission of a timely and conforming tender an acceptance.

... I am ... pleased that what seems to me the right legal answer also accords with the merits as I see them.

... I would accordingly dismiss the appeal. ...

[emphasis added]

Stocker LJ

Agreed with conclusions reached by Bingham LJ and his reasoning.

The format of the invitation to tender document itself suggests, in my view, that a legal obligation to consider to tender submitted before any award of a concession was made to any other operator was to be implied in the case of any operator of aircraft to whom the invitation was directed who complied with its terms and conditions. The fact that the invitation to tender was limited to a very small class of operators is itself of significance. The circumstances surrounding the issue of the invitation to tender and the formal requirements imposed by it support the conclusion. Of particular significance, in my view, was the requirement that tenders be submitted in the official envelope supplied and endorsed... The purpose of this requirement must surely have been to preserve the anonymity of the tenderer and ... to prevent any premature leak of the nature and amount of such tender to other interested or potentially interested parties. Such a requirement, as a condition of the validity of the tender submitted, seems pointless unless all tenders submitted in time and in accordance with the requirements are to be considered before any award of the concession is made. There can be no doubt that this was the intention of both parties, as exemplified by the defendants' actions when their error with regard to the time of receipt of the plaintiffs' tender was appreciated. Such a common intention can, of course, exist without giving rise to any contractual obligations, but the circumstances of this case indicate to me that this is one of the fairly rare exceptions to the general rule expounded in the leading cases of Spencer v Harding [1870] LR 5 CP 561 and Harris v Nickerson [1873] LR 8 QB 286. I therefore agree that in all the circumstances of this case there was an intention to create binding legal obligations if and when a tender was submitted in accordance with the terms of the invitation to tender, and that a binding contractual obligation arose that the plaintiffs' tender would be before the officer or committee by whom the decision was to be taken for consideration before a decision was made or any tender accepted. This would not preclude or inhibit the defendants from deciding not to accept any tender or to award the concession, provided the decision was bona fide and honest, to any tenderer. The obligation was that the plaintiffs' tender would be before the deciding body for consideration before any award was made. Accordingly, in my view, the conclusion of the learned judge and his reasons were correct. [emphasis added]

Held (Bingham LJ)

Because of the 'considerable labour and expense' that may be involved in preparing a tender then, at least where invitations to tender are provided to selected parties with clear procedures (as in this case) then, if the invitee submits a conforming tender 'he is entitled … to be sure that his tender will … be opened and considered'. To this extent, the invitation to tender constituted an offer which was accepted when the Aero Club made a timely submission.